Analysis in Japan reveals a direct positive correlation between improved corporate governance metrics, such as board independence, and equity returns. This suggests that governance reforms across Asia are not just about compliance but are a tangible source of investment alpha for discerning investors.

As passive index funds dominate markets, they become massive but indifferent shareholders. Unlike fundamental investors, they vote proxies based on institutional safety ("CYA") or political agendas, not on what maximizes a specific company's value, which fundamentally warps corporate governance.

Contrary to modern finance theory, companies owned by non-profit foundations demonstrate superior long-term financial performance, longevity (6x more likely to reach 50 years), and return on assets compared to conventionally structured, shareholder-first corporations.

The "best practice" of loading boards with independent directors is flawed because they often lack significant ownership. Their loyalty trends towards the norms of the broader financial system and their professional network, rather than the unique, long-term mission of the company they govern.

Public companies, beholden to quarterly earnings, often behave like "psychopaths," optimizing for short-term metrics at the expense of customer relationships. In contrast, founder-led or family-owned firms can invest in long-term customer value, leading to more sustainable success.

A study found that CEOs trained to prioritize shareholder value deliver short-term returns by suppressing employee pay. This practice drives away high-skilled workers and cripples the company's long-term outlook, all without evidence of actually increasing sales, productivity, or investment.

Sludge is profitable in the short term. With CEO tenures shorter than ever and compensation tied to quarterly stock performance, executives are incentivized to cut customer service costs now, even if it harms long-term customer relationships and brand loyalty.

Data since 2008 shows that companies with so-called "bad governance"—often founder-controlled with less board independence—have, in aggregate, financially outperformed those following conventional "good governance" best practices, challenging the entire framework.

Investment research suggests the significant performance signal in governance isn't achieving a perfect score, but rather avoiding companies in the worst decile. The key is to steer clear of clear red flags—like misaligned boards or poor capital allocation—as this is where underperformance is most clearly correlated.